There are many reasons to want to invest in Thailand. For one, the country has enjoyed one of the fastest-growing economies in the world for much of the past decade, with GDP growth reaching double digits on several occasions, thanks to the breakneck expansion of Thai manufacturing prowess and industry.
In addition, many foreigners have ridden the wave of a record-shattering real estate boom over the past few years that has seen property values in top-tier markets such as Bangkok CBD and Koh Samui reach dizzying new heights. But how can foreigners take advantage of the strong growth of some of Thailand's largest and most dynamic listed companies? Read on to find out.
First off, it's worth noting that, as a foreign resident, it is possible to buy stocks and build a stake in a listed Thai company. Unlike neighboring countries like Vietnam or Laos, where it is fully illegal for foreigners to own any stake in a major local company, Thailand has relatively liberal rules of expatriate investors.
You can buy stocks in most companies on the Thai stock exchange (although there are sometimes exemptions for companies deemed to be of critical national importance). The catch is that foreign ownership in any Thai company has an absolute maximum ceiling of 49%, without exceptions.
This means that it is not possible under Thai law for majority ownership to fall into foreign hands. You might think that this does not affect you, since you are not planning to buy a majority stake in Red Bull anytime soon. However, if 49% of a company's stock is already in foreign-born hands, then you will not be able to purchase any additional shares as a foreigner, even if you don't own zero shares in that company.
In addition, it is worth noting that it is very, very rare that a Thai bank will allow you to open up an investor account on a tourist visa. You will typically need to show a permanent residence permit or long-term residence visa in order to qualify. Most major Thai banks offer investment accounts and brokers for international customers.
If you would rather speculate on the value of those companies without going through all of the paperwork required to buy the stock outright, you could explore your options for CFD investing.
CFDs, or contract for difference, are financial products that you can trade online that allow you to take long and short positions on many of the world's biggest companies without actually owning the shares themselves. In addition, CFD trading can be an easy way to avoid the often very high brokerage fees that Thai banks charge most foreign account holders. For many, this provides an opportunity to trade in a market they would otherwise have no access to. Still, as with any trade, the value of your investment can go up or down.
You might be wondering what your options are if you want to invest your money in Thailand. First off, if you jump through the correct hoops you can invest in any one of the dynamic and high-growth companies on Thailand's leading exchange, the SET. You could invest in ThaiBev, PTT, Indorama, or any other multi-billion-dollar Thai company.
However, it is worth emphasizing that, although doing so is totally legal, there are significant barriers to entry for foreigners, such as high brokerage fees and hard limits on ownership. That's why it is always worth pursuing options such as fractional stock ownership if you open an investment account with a Thai bank, or the CFD route highlighted above.
Now you know your options, you can start investing in one of the world's most exciting economies.
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